The great "gas crisis" swindle

The gas industry and the NSW Government wants us to believe the more gas that is drilled, the lower the local prices. This simply isn't true in a global market, writes Mark Ogge.

Today, 150 select invited guests from the coal seam gas and LNG industries, politics and finance will gather in Sydney for an "energy security summit" headlined by the new federal Industry Minister Ian Macfarlane and NSW Resources and Energy Minister Chris Hartcher.

The summit is a response to the much vaunted "gas crisis" in New South Wales - a crisis concocted by an industry determined to entrench its interests in the economic fabric of the state.

If you can create a "crisis", offer a snake oil solution, and make a lot of money out of both, then you are onto a good thing. All the better if you can blame someone else for causing it in the first place.

That's exactly what the coal seam gas industry is doing, in partnership with Chris Hartcher. Remember, it was Hartcher's department that, in an Orwellian briefing note leaked last week, sought to 'disappear' community concern about the encroachment of CSG by re-branding it as "natural gas from coal seams".

The industry backed by Hartcher claims that unless we dramatically increase production of CSG, NSW will have to "import" its gas from other states. This ignores the fact that the whole of eastern Australia is a single gas market, and that there are no import restrictions between states. NSW doesn't make any cars; demand is met by importing from overseas or interstate. Does that mean we also have a "car crisis"?

The real problem here stems from the gas industry's plan to export massive amounts of CSG as LNG from Gladstone in Queensland, starting next year, where some of the world's biggest gas export terminals are currently being built. Once Australia's gas market is linked to the global market, those manufacturing industries which rely heavily on gas will have to pay much higher gas prices, set by the global gas market.

This isn't about Australian companies exporting gas for Australia's benefit. These gas exporters are overwhelmingly foreign-owned and include several huge Asian state-owned companies like Malaysia's Petronas, Korea's Kogas, Petrochina and the China Petroleum Corporation. They will demand local industries compete with Asian customers for Australian gas. Almost all of the gas exported from Australia will go to Asia, where the wholesale gas price is currently around four times that in Australia.

The Australian Industry Group (AIG) has reported that a handful of industries, including the aluminium and chemical industries, account for about 85 per cent of industrial gas consumption in Australia. A big increase in the gas price will significantly increase their costs and make them less competitive.

In other words, the opening up of the LNG export industry in Queensland will deliver a windfall profit to the gas exporters at the expense of these other industries. Every dollar of additional profit to the gas exporters will be at the expense of Australian manufacturing and consumers. If Australian manufacturers are not prepared to pay these prices, they won't get the gas.

Not surprisingly, the manufacturing industry is up in arms that the gas exporters are demanding they pay billions of dollars more for gas every year.

Having created the "gas crisis", the gas exporters are attempting to deflect blame for the rising prices onto "environmentalists" - largely regional communities working to protect their groundwater, land, health and livelihoods from the rampant expansion of CSG.

And the gas exporters' "cure" for the "crisis": allow them to drill for more gas.

This would be achieved by winding back even the most basic protections, such as the two kilometre exclusion zones that applies to CSG around residential areas in NSW.

This proposed "cure" assumes that the more gas is drilled, the more gas will be available for local consumers and the lower the prices. It ignores the simple fact the gas will still be part of the same gas market that covers all of Eastern Australia, which will be linked to global prices.

In other words, no matter how much gas you drill - even if you could turn tens of thousands of square kilometres of NSW farmland into one huge industrial gas field - local users would still have to compete with international prices for the gas.

Comments (209)

Elementary Watson:

mikemwa:

26 Sep 2013 5:11:46pm

The problem is also foreign ownership. People get agitated about foreign ownership about land and completely ignore the real problem we have is with foreign ownership of our mining industry. Particularly so in the oil and gas industry where the foreign ownership is close to 95%. Meanwhile we get screwed by them and governments of both persuasions say nothing. The Liberals because they have sold their souls to them and Labour because they were too scared to take them on.

The thing that amazes me is that the shock jocks have very little to say on this foreign ownership. It is a real issue that they should have their teeth into but mostly they say nothing.

Mitor the Bold:

Cynic:

27 Sep 2013 10:32:32am

Well, Mr. Rudd tried to take them on with the Super profits resources tax. The intellectual pigmies at the AWU were played like a violin by the mining companies read: BHP and Rio who got exactly what they wanted. But the summary is spot on - the contract gas price linked to petroleum is a market price demanded by the massive investment. The "energy security" conference was a more political than anything else.

Fran:

26 Sep 2013 10:00:41pm

Chris Hartcher is a NSW LNP minister. So they obviously have no intention to hold out - regardless of what they promised the people before being elected. We've all been swindled. We don't have a democracy any more, just a poor illusion of one. Both sides of politics are at the beck & call of the megalithic international corporate mining industries.

Oaktree:

BazBoy:

27 Sep 2013 12:37:11pm

Yep, Tony Man Date Abbott cares naught about us and what we think about his glaring contradictions. The whole Border Security thing with boats and its direct relevance to National Security contradicts with the greater importance of our National Food Security which CSG will undermine (literally) and Abbott supports this treachery. Not only will the cost of food and clean water increase but so will the cost of LNG.

Manufacturing will have to pay more and will become less competitive. The Libs have banged on about saving manufacturing but by helping foreign owners of CSG make more money and take it out of Australia, manufacturing will be crushed and jobs will be lost. Clearly not in Australia's best interest! It is just bad all round and stupid. Makes us wonder who Abbott really works for, certainly not Australia.

Between the threat to our Food Security, our Water Security (in a land of so little good water), manufacturing and the massive increase in the price of Gas Abbott is going to destroy our economy. No wonder he's hiding everything. What we don't know we can't challenge and that is extremely anti-democratic.

Recent History has proven that every time a government sells off something or supports activities like this and promises (lies) are made that prices will go down prices actually increase dramatically. Electricity, water, banking costs, you name it - its gone up despite government promises we'll all be better off. The only thing that increases is the amount of money going off shore to other countries.

Ralph:

27 Sep 2013 2:51:20pm

Correct, our governments sell things because the private sector is so much better at running things.Problem is that foreign governments buy the assets up and the price goes up, locals get sacked and the cash disappears.

Asceptic:

TrevorN:

26 Sep 2013 2:54:24pm

Minister Macfarlaine is just giving the nod to his industrial and mining mates that now the Abbott gang is back in town it's back to the good old days of "let 'er rip," and to hell with the environment and the little people standing in the way.

One can only assume that he is voicing the opinion of the PM and that his press statement was approved by some unelected staffer after he went cap in hand to the PM's office to seek permission to actually say something.

burke:

Adelaide Rose:

26 Sep 2013 6:42:47pm

The only people who would believe that are the most naive and ignorant. The Coalition and mining companies are after big profits, to hell with the environment, Australians and the poor people of China.

Andy:

That's a straw man argument. A primary school debate adjudicator would roll you on that one.

The discussion is about extracting gas from subterranean coal seams. It's not about digging up coal. You do see the distinction, don't you?

Look, I'll try and make it simple. Coal is black, and lumpy and is carted around in trucks and trains and coal-ships. Gas is, well, gaseous and invisible, and is transported in pipes and tanks and special LNG tankers.

You might use gas in your stove at home, but you probably don't burn coal at home. There's lots of differences. Why don't you try and think of some others? That would be a good mental exercise for you. Perhaps draw a picture of coal and another picture of gas, and see how you go.

Nick:

27 Sep 2013 9:03:41am

Let's not 'say' it ,Burke. I want you to 'prove' that it will be the outcome. And, while you're at it, justify raising domestic gas prices at the expense of Australians for your hand-waving goodwill towards China.

w ch:

27 Sep 2013 1:10:09pm

So we will go into poverty to help people in China get out of poverty. Sounds like the way the European Empire system worked. Colonial peoples plunged into and kept in poverty, so the colonial resources could go to Europe and lift their people or some of them out of poverty. That really sounds like a great idea, Burke. Make Australia a resource colony. See you on Australia Day or whatever you propose to rename it.

Leon Fairmind:

27 Sep 2013 10:19:11am

In this new era of crowd-funding, some farmer that has had his property damaged by drilling, or a community group that has enough evidence on damaged waterways, should start a class action against a particular Mining company.

I for one would contribute hundreds of dollars, and I reckon many others would too. A good crowd could match the might of just one company, and give them a proper shake.

Until some massive fines are handed down for environmental damage, the miners and their LNP mates will continue to ride rough-shod over all of us.

The greed-fuelled rush for profit at the expense of our environmental future must be stopped.

molpol54:

26 Sep 2013 2:59:58pm

Thank you for the article Mark - the more articles that are printed, hopefully the more informed people will become and the louder their objections can become. Changing the name is not fooling anyone and those who are trying to stop this distructive form of mining need much more support in trying desperately to stand up and have their voices heard.

Governments and business are just not listening and it appears, show absolute contempt for those physically objecting - Australian's need to wake up and pay attention to what is happening.

Nick:

MIK:

27 Sep 2013 2:45:23pm

Actually all 3 are completely different things. google them and add "for kids" at the end of your search parameters. i dont mean that in a nasty way but they are explained very simply so the difference is quite clear.

bobtonnor:

26 Sep 2013 4:13:21pm

The greens candidate for Cowper stood up and shouted about this, she challanged Luke Hartsuyker to debate after debate, anytime, anywhere, what happened? Nothing, he ran away and hid, he then popped up and did what he always does, gets a photo taken in some bizare spot and says that he against coal seam gas on prime agricultural land, but then will not define what prime agricultrual land is, people of Cowper you have right royally shafted, enjoy!

Policy Defunct:

26 Sep 2013 7:09:37pm

BobI live in the same electorate,LNP Luke Hartsuyker certainly is bizarre,his predilection for photo-opts at highway memorials screaming 80% federal 20%state funding (historical hogwash) never took in Howards 50%-50% and not a penny more stance.These clowns are re-making history,I would hazard a guess that if popular opinion swung against him,his excuse would be the Greens,Labour,Mickey Mouse made me do it.

leigh of Tregevis:

26 Sep 2013 4:42:43pm

You are right who, the greens should be focussing on this issue, as well as many others, including Australia's ethics.I think you'll find it has been Abbott and Co who have done the most "banging on about boat people", at least until he got elected.

And of course they do. Here is the Green policy on CSG. There are many other policies at that site. And the Greens, not ALP or LNP that had all their policies fully costed in good time for the last election.

RosiePerth:

26 Sep 2013 4:51:54pm

The Greens are doing just that whogoesthere - they already have policies regarding this desecration of our farming lands & drinking water and are actively campaigning against it eg I attended a Greens anti-fracking rally in Perth a few weeks before the election.

Check out Larissa Waters' site as she's the Greens' mining spokesperson).

However, what people need to understand is that the Greens are not a one issue party - they have policies on all aspects of our society and economy (all costed by the Parliamentary Budget Office) and stand up just as much for social justice as well as economic and environmental sustainability.

whogoesthere:

27 Sep 2013 9:50:40am

SHY has herself said she got into politcs because of Tampa. The environment is not her main concern. As for The Greens being criticised for being a one issue Party, given their result at the last election, what they are doing is not working.

Leon Fairmind:

27 Sep 2013 11:52:08am

Leigh, the Greens are just a waste of space and a wasted vote, unless they soften their hard-line attitudes, stop bagging out Labor (who you will have noted on the Vote Compass matrix, are in the same square as the Greens, while the LNP are in the diametrically opposite box) and bag only the LNP instead.

Then they might be able to form an effective coalition with Labor and actually achieve something with their policies.Getting their policies costed for the last election was an utter waste of time for the PBO.

NWM:

26 Sep 2013 4:53:44pm

I totally agree - it's about time the Greens focussed back onto looking after our planet and leave the social issues to another type of party (like the Democrats were). The dilution of the Greens focus away from the environment and sustainable economy is weakening their relevance and influence. The Greens should be leading the charge to force Governments to support the development of a new type of sustainable economy including development of sustainable energy export industry.

Oi Mate:

Lord barry:

26 Sep 2013 5:54:09pm

Have you not heard of Lock the gate ??? The Greens have been , going out in National Party land and explaining the threats to farmers . Even before Alan Jones hopped on the band wagon . Try reading a bit wider than Ltd News .

James Murphy:

26 Sep 2013 9:59:33pm

Yeah, but the point is, the Greens have had a much higher visibility with regards to matters which are not directly environmental, whether that is due to the media coverage, or a Greens decision, or both, I don't know...

I want the Greens to be more outspoken, more visible, and more in touch with their Green fundamentals, rather than trying to be a political "jack-of-all-trades". That's not to say that they should be silent on other matters, of course, but they should be actively seen to be maintaining the environment as their priority.

OntheRun:

26 Sep 2013 6:11:16pm

I would support the Greens if it wernt for there international policies. I am willing to vote Green at state level but refuse at federal.

This is an example. I support the move to regulate potentially damaging industries in Australia. I do not support the move to have an internationally unbalanced carbon tax, accept endless "refugees" or blindly follow the UN down every decision. Fortunately, state governments cant do that.

Stirrer:

26 Sep 2013 3:13:43pm

Good article which exposes the axis of evil between politics,big money and the quick buck.

So the 'great Gas swindle' will join the great financial swindle-the great globalisation swindle-the great political swindle and the great freedom and democracy swindle of the past 30 years- in the greatest fraud in history- the restribution of wealth from the middle class and the poor to the top 1%.

Just how dumb are we? are the farmers and people who live in the regions not stakeholders in their future- so why were they not invited to the talk fest?

Are we not entitled to share in the profits of exports out of our ports-why do not our Governments have EQUITY in all resource projects? Norway does- and has the largest wealth fund in the world. But why the rush to drill-drill-drill and dig-dig-dig? Is it to sell as much of our coal, dirt and gas as we can before the world moves on climate change and before the advent of the Third Industrial Revolution?A revolution in which we should be leaders but one we will surrender to Chinese and other multi national corporations=who once having seen us dig our own grave will happily bury and control us.

burke:

Greig:

26 Sep 2013 5:53:38pm

Stirrer, governments do not need equity in industry, that is an old fashioned notion that died when the Berlin wall came down. Our government merely needs to continue to seek tax revenue on profits made (as they always have), and to ensure that any industry operating in this country operates by our OH&S and superannuation standards and pays wages so that the workers in turn pay income tax. And that way they can in turn provide back education and health services to the population.

Stirrer:

26 Sep 2013 6:53:29pm

Greig;So how come so many countries still have EQUITY in resources-finance and manufacturing. Why even the UK Conservative Government has equity in the RBS and Barclays- and what about Singapore and Norway?

I think i have a much better understanding of how Government works in Australia than you do-silly comment anyway.But for your information I would say it is on its way to working like that of the US-which Daily Reckoning Australia (hardly a leftie investment publication) described as an evil cabal of politicians/finance and military-industrial complex.

RoxyR:

26 Sep 2013 6:12:52pm

Stirrer,

Nothing wrong with government having equity in projects, provided it is prepared to;Staff up a competent energy section that can perform as an energy Joint Venture partnerPut up the money to develop their share of the resourceTake the risk that the project is not profitable, or worse fails

So far the economic model for Australia, supported by both political persuasions has been for the private sector to take that risk and for the government to receive taxes and royalties. Despite the furore over the MRRT, governments do in fact collect a lot of money via income tax and royalties.

Of course this model can be changed but multi national companies will do their calculations and if the reward is not sufficient they will look to explore and develop elsewhere, we cannot force companies to take risk and spend money.

Remember it is the resources boom that has been powering our economy.

Another alternative is to be a third world country like Venezuela and take a majority share and get companies to spend the capital and then nationalise them. You only have to see where that has taken them to rule that out.

Stirrer:

26 Sep 2013 7:40:33pm

Roxie; Glad you agree there is nothing wrong with Government having equity in projects.But why do you give Venezuela as an example -why not Norway or Singapore-both of which have extremely well run and wealthy=wealth funds.And we are not talking about Government control- I cannot for the life of me see why we cannot have an intelligent mix of private AND Government ownership. After all we had banks, airlines and telcos which were so well run they attracted premium prices on listings.Why not have Governments take dividends AND taxes- surely it is better for us to have divies for OUR common good than have them sent off shore?

Seems we have not learnt a damn thing from the mess created by financial engineers.

RoxyR:

26 Sep 2013 11:10:09pm

Stirrer,

Norway I can't comment on as I have not looked at them in detail. Singapore has negligible resources to talk about. Its success story is based on excellent trading & commercial expertise. The latter very much in the financial field.

I can only reiterate the large financial/technical risks in the resource/energy field, far more than in the other areas you mention; not every government is prepared to get involved.

Norway model makes sense:

26 Sep 2013 9:12:16pm

If Australia were to model its handling of resources in the way Norway does, future generations might think us intelligent. Norway has a Current Account Balance that is a world-leader in large part because it still has part ownership (67%) of its petroleum processing industry (Statoil). Aus has what? the ability to gift its resources to mainly foreign entities in exchange for exploration rights + royalties based on tonnage exported. Hard to believe just how daft the Aus model is ? give the resources away, then pay through the nose to get access to the product down the track, then in a 100 years wonder how to repair the water table. Gosh.

Gilly:

26 Sep 2013 3:21:27pm

I don't know about the CSG Industry specifically, but for all mining revenue in Australia is foreign owned. The whole question has very little to do with the e4lectorate, prices, energy security or environmental concerns. It is all about business, complying with the Corporations Act and maximising returns to shareholders, even at any risk to the nation in any shape of form.

burke:

OUB :

26 Sep 2013 7:10:22pm

I gather the big player is BG (formerly British Gas I believe) after a series of takeovers at what now may be high prices. Origin Energy, a local company, operates a big consortium with a large number of overseas investors involved. AGL Energy is a local company that has largely been dealt out by nimbies despite a good record. Santos is local, they operate in convential and unconventional gas and oil I believe, will likely supply NSW at relatively high prices due to AGL's hamstringing. There are a lot of small local hopefuls as well.

How is BHP a foreign miner? The local side of the dual listed company is the biggest of the twins. No doubt there is a large foreign investor cohort on its register but how large who would know? Those larger holdings, foreign and domestic, tend to be held by nominee companies, disguising the ownership. I am sure most blogging here have an interest in BHP, directly or indirectly. Don't listen to the Greens bottom talking, they'll lead you astray.

Blurt:

26 Sep 2013 5:54:31pm

In theory, yes. In practice, not if the new supply is not enough to push down the price with over-supply.

This is Mark's contention. New gas will be at the high price, because of the huge export demand that punishes domestic industry and individuals from the cost they had without exporting the gas from the east coast.

We don't have to export gas from the east coast, but choose to. So we effectively choose high domestic gas prices hitting industry here, but plumping up the profits of foreign exporters.

James Murphy:

OUB :

26 Sep 2013 7:18:18pm

No I don't think so. A glut generally does lower prices (unless someone has a high degree of control of the market, like De Beers and diamonds) but the demand will likely rise as well, though to a lesser degree. Some of the additional demand might come from investors, some might come from switching from other more expensive substitutes, some might come from industries starting up that were previously uncommercial. I'm not an economist either but I remember that graph of intersecting supply and demand lines... Nasty.

Mark O:

26 Sep 2013 3:23:36pm

Here are some facts, which the above article avoids.

-80% of NSW gas is imported from interstate-the contracts for the above extend only to 2015- the 20% of NSW produced gas is actually CSG and has been for years-contracts for LNG export via Gladstone are contracted at much higher prices the NSW domestic gas- the Gladstone LNG projects do not yet have enough gas volume to fill the contracts- come 2015 the "NSW" gas will be exported via Gladstone- NSW has no way yet to replace this gas and therefore either pays significantly more for it, or develops more CSG - eg the Santos project at Narrabri.- to not do this places NSW domestic gas at risk, which means power shortages affecting industry and households. Or paying the export price for it - IF volumes above the export volumes can be developed

Your choice NSW. I think that the vocal opposition will be drowned out once the brown outs and rolling blackoputs begin, and/or the prices double or triple.

If you like electircity at reasonable prices, the NSW voters and politicians have some proagmatic choices to make and very soon. Ian McFarlane understands this but I wonder how many NSW residents do?

db:

26 Sep 2013 4:06:13pm

Rolling blackouts? I suggest you look up how many MW of electrical capacity in NSW runs on gas and compare that to the total capacity. You'll actually be able to deliver "facts" that way instead of baseless speculation.

Mark O:

26 Sep 2013 5:59:30pm

many CSG projects proposed in NSW are not near major pipelines and are intended for domestic gas (as I understand it).

A recent pipeline proposal from Alice Springs to Moomba is designed to bring NT gas into the East Coast system. This is only being considered as a result of the impending issues. I do not think NSW will want to be reliant on others investment decisions ot decide their gas prices.

demanding better:

What the people of NSW 'think' they want, and the level of understanding they hold concerning energy are both very far cries from the reality of the state energy market.

An example from gas' ugly girlfriend - the electricity market:

Most people in NSW I've talked to don't even understand the complex reasons about why their pockets are getting raped by electricity companies - poor regulation, spot price fixing, borderline collusion, gold plating of infrastructure, ridiculous subsidy schemes that have promoted parasitic business practices in the market.

It's all slipped by relatively unnoticed by Joe public. They just get a bit upset every three months and quickly forget because they feel disempowered to make any real change with an industry they know nothing about. Joe public's more concerned about which pollie's got a more trendy way to turf refugees off to cesspools slightly better than the ones they risked their lives escaping.

The gas sector - being heavily reliant on private investment - is quite obviously prone to the same degree of misinformation and hogwash schemes like CSG which in essence are another form of shallow economic vampirism designed to give wealth to more people who don't need it, and in the process will damage the greatest asset that we have - being the land we depend upon for food and water, which in case you've forgotten Mark, are the two most basic human needs aside from air.

So Mark, or should I say, gas puppet, the question for you is:

Are we not already at both a state and federal level reliant on the investment and advice of parties and corporations which have already failed (and I'd speculate that this was quite deliberate) to deliver anything remotely resembling the interest of us, the little people, the people who actually vote these faceless succubi into power on the premise that they will deliver solutions to problems like ridiculous prices for energy?

(I think next election I might flip a coin for the two parties, and hope it somehow explodes and kills me before I endorse another three years of either side's incompetence or insidiousness)

Mark O:

Lets say I agree with your theory and we are at the state you mention. Now what?

Who and how is the investment to keep energy supplies (from all sources) that cities are totally reliant on going to be made?

Governments (taxpayers) do not have the money. You are left with profit motivated corporations. Governemnts try to drive the best deals thay can, but at the end of the day, unless we are prepared to live agrarian lifestyles again, we need the investments.

Gordon:

27 Sep 2013 2:38:59pm

exactly...this whole debate is driven by a fantasy view that just because the gas undiscovered in the ground belongs to the people, it somehow can be discovered, produced, processed and distributed by magic and for nothing.

Ralph:

It seems only some governments do not have the needed cash or ability to run enterprises.

Our governments got rid of their banks, electricity companies, mining involvements etc as they recon private companies do it better.

The Indonesian government wants to buy a million hectares of grazing land, Singapore government owns more of our electricity than any one else.Chinese government bodies are buying and running mining rights as fast as they can.

Labor got kicked out of NSW for the corruption, that then went federal, now both new federal and state leaders are displaying the same level of behaviour Labor did.

It seems we are headed in the same direction as Greece.Or will it be the Syrian path?

bobtonnor:

26 Sep 2013 4:30:55pm

Thats exactly right, but its even simpler than that, once the brown outs and rolling blackouts occur we can, if need be rely on renewables, a recent report said this could be done by 2030 at no more expense than keeping the existing system, but drain down the water and possibly poison it, with 'in commercial confidence' chemical cocktails and what will you do then? drink beer? the first fleeters did....so the question that really needs to asked is not 'are you prepared to pay higher prices for gas', but are you prepared to take the risk with polluting our, and everyone elses kids drinking water so we can stick to old school technology for cheaper gas?

DaveS:

26 Sep 2013 5:10:52pm

So all we have to do is forget about the possible long term damage that comes with the CSG process, avoid renewable energy sources, damn our environmental concerns and bada bing bada boom..... we can make a quick buck! As for your concerns about brown outs , I'm pretty sure the vast majority of power generated in NSW is coal fired (it is).I must congratulate you on the scare tactic re brown outs and black outs, brilliant. No facts to back it up, but I sure got a chill.

Geoff:

Howard:

26 Sep 2013 5:22:42pm

I daresay "Mark O" that I find it very hypocritical for you to say "here are the facts, which this article ignores", when your own contribution does EXACTLY that. Here is why, and so the well-informed argument make here still stands- Foreign Billionaires are being great conmen and dressing theirown interss up as the public interest:

1. None of the first six claims you say have anything to do with the arguments about the way the Australian Public is being swindled and lied to-they are irrelevant.2. Point Seven & Eight are false, as the Article points out-The Public & Industry pay WORLD prices, NOT a cheaper local one.3. Therefore your conclusion-as the article points out-is the same Scam that the Public are being sold: That Lie 1: "Less CSG has a significant effect on the price the Public pay"; And Lie 2: "It is the fault of those trying to protect their land" (Farmers, Locals, etc.).

As the Article Correctly states- Big Special Interests are doing a scam. And in my view, Ian Macfarlaine is selling out his own National Party Supporters, and the Greens are too busy whining about refugees.

I wonder who you work for and would be happy to be challenged, although pls answer the argument this time.Thank You.

Hockeynomic buffoonery:

Did you read the article? A persuasive case that this is being manipulated by gas companies and their toadies in government. The 'summit' is a sham, of course.

And some of your facts are acknowledged, such as NSW imports gas - but so what? It is one market across states.

You are a bit confused in agreeing that the problem is the export of gas, but still opposing the article. Export price is high and so will draw the gas, meaning prices will remain high.

Increasing supply will be at the export cost, effectively, not cheaper unless there is enough supply to dampen the export cost PLUS domestic cost. That is the nub of the article, but you miss out on drawing the conclusion.

Reserving gas supplies is sensible, but won't happen as corporate profits and dumb 'free market' ideology get in the way.

As does the 'increase mining company profits at all cost' intent of the LNP. A fact for you: the mining industry has donated millions directly to the LNP (6 or 7 x more than the ALP). Millions more 'donated' through lobbyists. $20+ million in ads to benefit the LNP. Any surprise that Macfarlane et al are so gung ho on anything mining?

OntheRun:

26 Sep 2013 6:14:28pm

This assumes gas is the only source of electricity. This assumes that solar, wind, hydro, tide, coal, nuclear, geothermal and other powers can not be built.

Out of interest, if there is a contaminated groundwater supply that feeds into the Murray Darling Basin, considering we already have about 1,000,000,000 people without sufficient food in the world, would the loss of agricultural productivity be good or bad in international or local terms or both?

NWM:

26 Sep 2013 9:40:27pm

This one worries me too - can we please have more investigative journalism to heighten public awareness of this issue. Apparently that whole basin has huge aquifers under it that if contaminated will decimate agro-business in that area.

Once again Abbott's unexplained obsesssion to support the fossil fuel industry seems to come at the cost of other industries (agro-business, sustainable energy), and for the general environment.

I have come to want to know if Abbott actually CARES about the environment. Could we please get some journalists to find out for us?

Mark O:

27 Sep 2013 12:04:02pm

If you look at the facts, Germany and Spain are pulling well back from their green energy subsidies because they are bankrupting themselves. Renewable should continue to be developed but at the moment their scale and poor efficiency make them VERY expensive and inetrmittent options.

I am not anti renewable, I am pro nuclear and gas, because these are the only technologies which can be used now to reduce AGHG's. We need technologies to transition from coal while the renewables are in a position to take up the slack.

Bolivar diGriz:

So - drill, baby, drill or shiver (swelter) in the dark? Those are the only two choices?

I see another choice to make: keep the drills well away from arable land or starve with the lights on.

You raise one interesting point though, Mark O (it should be Astr O) - whose office do you work in? Macfarlane's or Hartcher's? I'm picking Hartcher, myself. The points you copied out sound more like you're quoting the official state ministerial line than federal.

Either way, stop laying the turf so thick. It's embarrassingly obvious that your "contributions" are from a flunky working late at the office.

Mark O:

Nick:

27 Sep 2013 9:21:41am

Why would a developer want to get paid domestic prices, when the international price is so attractive? How does government compensate a domestic market producer for foregoing the international opportunity?

CSG extraction was proposed in my district on the promise of building a local gas-fired power unit...then the other details of the deal came out: export to Brisbane ,then OS. No interest there in the state's market.....

Mycal:

26 Sep 2013 8:45:54pm

Davo the devastion of farm land hasn't actually occurred yet and there's no real evidence that it will. My one concern with CSG is that the environmental safeguards din't appear to be adequate and more science needs to be done, the sooner the better. Until it is done we should proceed carefully but under the Libs I can't see that happening either.

James Murphy:

26 Sep 2013 10:48:20pm

I understand that CSG wells take up space, and make farming difficult, and that things can indeed go wrong with bad casing cement jobs causing communication between coal and potable aquifers, but how do they automatically devastate the "health of our most productive agricultural land"? Sure the risk of something going badly wrong is higher than not drilling any wells, but please try to have some perspective. I'm certainly not saying "drill at any cost", but I am saying that you should be more measured in your assessment of the situation.

The cattle which wander around in the Santos oil/gas fields in SA/QLD are classified as "organic", and sell for more than other cattle, and there are rarely any fences, or boundaries to stop said cattle from standing around a wellhead for a while, which I've seen them do. If that environment is so devastated, how come the cattle are allowed to graze, and how come they fetch higher prices than other cattle? Of course, the damage that cattle cause is another problem...

Peter of Melbourne:

26 Sep 2013 4:15:33pm

"This is the most egregious assualt on Australians by any government ever and it will be resisted tooth and claw"

This would have been planned under the other numbnuts as well. These types of projects take on the order of a decade to formulate and Government is involved every step of the way to ensure the longterm viablity of the projects.

The Liberal and Labor Governments have no interest in the greater good for our society, they are only interested in the next electoral round. Maybe it is time for the sheeple to start holding both sides of the political spectrum to account equally whilst middle Australia does the same. If that means no Government gets elected because of a lack of faith by the citizens of this country then so be it. That is the reason we have a Constitution, to deal with such situation.

burke:

mikemwa:

26 Sep 2013 5:45:53pm

Lets get real. The LNP are closet Liberals. When the Liberals couldn't beat the Nationals at the ballot box they decided to merge with them and take them over from within. That job is now done and the LNP members will toe the line and vote as the PM's office wants irrespective of whether that is the their constituents or the country's best interests..

Truthy:

Melissa:

26 Sep 2013 3:36:04pm

Inventing a crisis? Perhaps they are learning from the environmentalists? Since ecidence is mounting that the potential risks of coal seam gas extraction have been grossly exagerated, why not use it. And Mr Ogge, the majority of farmers support not oppose coal seam gas extraction.

Serenity:

26 Sep 2013 4:20:39pm

Where did you get the "ecidence" about this, Melissa?You obviously don't know the chemicals used in this process. I suggest you start researching what's used.Only farmers who want a quick buck so they can sell out will welcome the rape of their land.

James Murphy:

26 Sep 2013 11:32:38pm

Chemicals? Yes, food grade ones they use to drill with... like Guar gum (the expensive option), xanthan gum, corn/potato starch (though not often in Australia), clay, calcium chloride, potassium chloride, barite, fibrous material (almost always wood, or plant based), occasionally calcium carbonate, and some biodegradable polymers (contact with coal breaks them down). The water extract from the coal has more horrible things in it than the fluid used to drill the wells. None of it is "healthy" as such, but it's not exactly liquid death either.

I realise that, as I have worked in the oil industry (as a geologist) for almost 10 years, I am probably considered far less credible than someone who has just read a few articles here and there though.

Having said that, I don't like CSG drilling, or that aspect of the industry, and won't ever be part of it, for a few reasons.

You're mixing up shale gas hydraulic fracturing with CSG (as so many people do. Santos have been hydro-fraccing their wells below the Great Artesian Basin for years and years, and no one seems to have complained about it, at least not on the same scale...

Care to name some of these bad chemicals yourself, and detail where they've been used in CSG in Australia?

bobtonnor:

26 Sep 2013 4:37:55pm

it doesnt matter if they do or dont, they dont have any rights to stop gas companies coming onto their land anyway, the 'in cmmercial confidence' chemical cocktails rammed down the tube to fracture the coal seam dont understand when and where to stop and so can end up getting into the underground water systems and before you know it the whole system is corrupted, what are you going to do then?

keith:

26 Sep 2013 3:36:28pm

The csg companies will be like all the rest..let us tust your land into a worthless mess and we will get rich, you will pay more same with the power and water mob save power/water so we do then thay say we need to put the price up as people are not useing much and out profits are falling..waht a load of BS....and ABBOT will back the cash as always

burke:

Lewis:

26 Sep 2013 3:40:31pm

I hate to say it but the only way we can protect our communities, our own land use, water security & cheap access to our own resources is to vote Greens at the state level. Sure, it would also involve unwanted consequences if the Greens gain a meaningful share of power in state parliaments but I no longer think we have a choice. Both major parties have shown they cannot be trusted on this issue.

RobMorganAU:

Interesting point there... Your opposing vote seemingly protects you from the consequences of physical environmental degradation, while for those on the other side of the debate, you hope they suffer.

My humble plea would be for us all to act, rather than ruminate in self-serving or smug told-you-so superiority. This has been a hallmark of the extreme right. The rest of us should be capable of better.

karlen3:

26 Sep 2013 3:45:31pm

Good article, & a timely one as well. On Q&A last Monday, David Suzuki reminds us of the insidious relationships that exist between governments & big business not just here in Australia, but around the world. And here in this article yet another example of how that relationship works, not for the community but for the profits of a few manipulators keen to get their grubby hands on the maximum amount by any means possible. Who cares that the environment is lost to the short term gains of others. There has been far too many examples of this sort of manipulation aired recently & governments let it happen, even encourage it. Prime agricultural land is being lost, people & communities are being displace all in the persuit of profits. I do not have a problem with business making a profit, but when it has to be done through lies & misinformation then a line needs to be drawn. There is a wonderful saying I saw on a badge that goes: "when injustice become law, resistance becomes duty". And why would it not?

RoxyR:

Kangaroo Edward:

26 Sep 2013 3:49:02pm

It will be interesting to see how this all plays out with Abbott riding roughshod over Barry O'Farrell and co in what is by and large the National Party heartland.Country members at odds with their 'big smoke' Liberal mates over the destruction of prime agricultural land in the pursuit of the multinational buck.When all is said and done and those 'loony' protesters/farmers lobby groups are led away, Australians will be paying global prices, that's for sure. The Liberal policy of slashing red and green tape is a nod and a wink to the 'robber barons' that our country is open for plunder.Business as usual.

David:

27 Sep 2013 8:11:37am

Abbott riding roughshod over O' Farrell and co in National Party heartland, that might be so, but are not John Anderson and Mark Vaille both ex Federal National Party leaders involved in the CSG industry? and both from electorates that would be affected by these projects?

Kangaroo Edward:

27 Sep 2013 8:31:46am

There will be more than a few country members lining up to fill their pockets.This is one of Barnaby's retirement schemes.It's the aspirations of the constituents that betrays the hoax that the Nationals have their interests in mind at all.

Matt :

26 Sep 2013 3:56:13pm

"Every dollar of additional profit to the gas exporters will be at the expense of Australian manufacturing and consumers"

Maybe not consumers, if you consider consumers also to be taxpayers. It would be good to remember that significant amounts of PRRT (Petroleum Resource Rent Tax) is paid on the profits of the production of oil and gas onshore, now that PRRT applies to all Australian onshore and offshore projects. Thus it is in the interests of Australians, that our governments do seek to maximise the profits of oil and gas projects within our territories by allowing produced gas to be exported at global benchmark prices.

By arguing that gas should not be exported, there is a significant opportunity cost to the Australian taxpayer, with potentially lower PRRT and company tax receipts being received from individual projects and potential delayed investment in projects from permit holders (Australian and foreign owned companies, they all play by the same rules) and hence less funds available for government investment in infrastructure and services in the future.

Basically as Australians, we can't have it both ways with foreign investment in our resources industry. Either we allow global benchmark pricing to drive investment and development and attract foreign capital or we as taxpayers effectively subsidise local industry by extracting the benchmark price for our collectively owned resources. It is a dilemma.

Gordon:

26 Sep 2013 3:58:09pm

Australian governments have always been at liberty to invest in oil and gas exploration and development for the risk and benefit of the taxpayer. They have chosen not to and have instead extracted a royalty (now the PRRT) from the firms who do. This profit-based PRRT rises with high export prices, benefitting the taxpayer at no economic risk to them.

The industries now screaming about supplies have enjoyed prices substantially below world price for years. If they thought this happy state would last forever more the fool them. They too are at liberty to take a position in the upstream part of the industry - which suffers from under-investment - so they would be very welcome. Then they can decide at what price and to who they will provide gas. Until then they can buy as much gas as they need at the going rate. There is plenty, but new developments cost new money, and no new gas development (CSG or otherwise) will fly at the old cheap prices .

Both Australian taxpayers and Australian industry have been happy to avoid involving themselves in the risky and expensive business of finding and developing oil & gas reserves but are now happy to whinge that those who have are doing something they might not like. Diddums. The gas, as we are often reminded, belongs to all Australians. Feel free to have a go producing it for nothing and see how you go.

bobtonnor:

26 Sep 2013 3:59:57pm

Id laugh at all the halfwits who voted for the likes of Barnaby Joyce and Luke 'batman' Hartsuyker thinking that its the good ole Nats who will look after country people, before having the land stripped from under them to mine the bejesus out of NSW if it wasnt such a bloody shame that the countryside is going to shafted in the process. You dont think Gina flew into Tamworth because she was really happy for the country folk did you? Do you reckon that John Anderson former nationals leader had his wikipeadia page purged of all mention of Eastern Star Gas just before the election because he thought it cluttered up his page do you? People are waking up way too late to this, its going to get messy, people are going to get hurt, but people are going to have to stand up to this, i will, will you?

campbela:

26 Sep 2013 4:02:50pm

Yes, rather sad and pathetic isn't it. As ludicrous as the argument is you should not be surprised if they get away with it.

Unsurprisingly what you get when you elect a bunch of luddites and base greedy people to government. I make no distinction between NSW State and Federal. We have to make a special, special place for the QLD lot. I am not quite sure what is wrong with them at the root but it is an incredibly low common denomnator.

Ol' China:

Peter of Melbourne:

26 Sep 2013 4:08:25pm

It was widely reported only last year that as more gas comes online and is exported, that Australians can expect to pay the same prices for the resource as those countries that do not have it. It is time to place quota's on all Australian non renewable resources so that the citizens of this country can enjoy the benefits of them rather than just the international conglomerates who stripmine our land and pay a pittance for the privilage.

Clancy:

26 Sep 2013 4:13:19pm

Mark makes extremely good points. I don't see that increasing CSG extraction in NSW will reduce NSW gas prices, it will only increase the risk of irreversably damaging farmland and water supplies. It makes no sense to do long-term damage for short term gains.

Mycal:

Jimbo:

26 Sep 2013 4:13:59pm

For the sake of being devils advocate:

* the aluminium/chemical industries that this article weeps for have been otherwise characterised as 'the big polluters' in about 1000 other previous articles on the Drum. They are generally just as much foreign owned as the gas producers. You are just arguing over who captures the economic rent from the gas: the producer or the user.

* they are big polluters because Australian gas/coal has traditionally been cheaper than global alternatives thus attracting energy intensive actvity here

* regardless of whether the producers are foreign or domestic owned the broader Australian population gets its return from the exploitation of natural gas via the corporate tax/PRRT system. Higher gas prices will increase this return

* I think the environmental concerns are valid particularly the interface with prime agricultural land. But trying to win the environmental argument by resorting to'fortress Australia' economic arguments is bound to fail (although will undoubtedly appeal to readers of the Drum)

sayItLikeItIs:

26 Sep 2013 4:16:59pm

Regarding "If they think that the Australian public will sit by and let foreign owned companies destroy the water table they have got another thing coming ", Oh come on, we argue, we protest, we do whatever we can to make the point that they will destroy the water table, the ability to grow food, etc which will, in turn, destroy lives and livelihoods but all they (govt & business) will ever hear (ie., listen to) is the sound of coins dropping into their bank accounts. Sad but true :-(

Serenity:

26 Sep 2013 4:28:41pm

I suppose we have to thank the Howard/Costello government for commencing the signing of the "free trade" agreements, followed by others, who have sold off Australia's land and riches to foreign nationals.

It's amazing how English & U.S. journalists (Newsweek, The Economist et al) are stunned how we've sold so much rich land to the Chinese who will take all the food out for their own citizens' use.

By allowing the CSG companies to rape the farmlands, where will we get our food in the future. Will we be relying on imports? This seems to be what the coles/woolworths duolopy are aiming for.

----Conspiracy theory alert!!! Is this duopoly aligned with mining to make farming so unsustainable that farmers will gladly sell their farms for mining? ----

rossta:

NWM:

26 Sep 2013 4:39:19pm

For goodness sake, what is motivating Abbott to be so pro the fossil fuel industry - it's BS with jobs, because the sustainable energy industry is waiting to employ thousands of people. If it's about making Australia wealthier - look at the example of the big miners - big profits into their pockets or going off shore - we can't even get a big profits/mining tax that is fair and in the interests of all Australians.

What is Abbott's obsession with fossil fuel? It just doesn't make sense. Is he or his party being funded by these people? Please, we need some strong investigative journalism to understand what is driving Abbott's regressive obsession to continue these industries that we know are not good for our planet, and at the same time trying to kill off the sustainable energy industry.

What is giving Abbott this sense he can just bully his way through - Australians on the right and left of the political spectrum are very worried about global warming. It is time for green Liberals to stand up and demand that Abbott back off and start to behave in the interests of all, and not hide away to do his dirty work in secret with his big business mates.

Australia is not just carte blanche for big business to do what they like without care for our environment and concern for the climate consequences of continuing this dependence on fossil fuel.

James Murphy:

27 Sep 2013 6:10:57am

Where are these jobs of which you speak? Will they be new jobs, as in genuine new jobs which need filling - and increasing the number of employed people, or will it just be that people will be reclassified as they continue with roughly the same jobs as before, but now with extra "green"?

I'd also like to point out that Labor didn't exactly stop CSG, and they certainly didn't stop coal exports increasing by an average of 7% each year over the last few years...oh, but that's right, it's all Tony Abbott's fault, isn't it? Grow up.

Mycal:

NWM:

26 Sep 2013 4:48:41pm

Australia has to stop being the fossil fuel drug dealer of the world - the amount of CO2 we are responsible for pumping into the earth's atmosphere is vast through our exports. Lets get creative and clever and get beyond this industry and start being brilliant in showing the way with becoming a sustainable energy economy and technology exporter.

Abbott environmental irresponsibility is unconscionable, and I cannot believe someone in this day and age who is leading a first world country can be so bigoted and ignorant as to not understand the implications of a warming planet on the way of life and even survival of our descendents. Go to Europe and see the receding glaciers - listen to reports of encroaching deserts and dying forests in Africa - really Abbott, stop taking Australia into the past and bring us into the post fossil fuel industrial age - it's the next big wave, so get on board.

R U Serious:

26 Sep 2013 5:14:10pm

Previous articles on the ABC website suggest that the global price is far more comparable to renewable energy prices. The fossil fuel industry is so self serving that it refuses to even consider such a notion. Carbon pricing was intended to prepare Australian industry for higher energy pricing. It was the current Government which argued incessantly that Australian Business would be disadvantaged. It's time to swallow a bit of pride, take a deep breath and move forcefully into wind and solar power.

Pete:

As an oil and gas geologist I can tell you that those LNG plants are like vacuum cleaners. They will suck up every spare molecule in the system. Anyone who doesnt know that is in denial.

There are only 2 choices - pay a higher price or make more gas available (or a combination of both).

philosophically why should a business owner who has gone through the pain of getting product to market and with a buyer waiting suddenly be told that they have to sell their product to somebody else at a lower price ?

hello

I think I will tell the corner store I'm paying less for their bread tomorrow. Now I think about it, how about the mortgage as well.....

Sue:

26 Sep 2013 5:25:06pm

CSG has not been proven to be a safe method of extracting gas - until we are given reports showing that it will not contaminate groundwater and land then we should not be doing it.And on the subject of foreign ownership - it really is time that Australia's resources, whether food, oil, iron ore etc came to Australians first - ie the growers/miners/drillers would only be permitted to export once the Australian demand had been filled. Perhaps it's time to bring back tariffs and controls so that WE get looked after first. I am tired of reading about so much farming land being sold off to the Chinese or whoever, driving prices up for us because the produce is being shipped to feed their hordes.

Greig:

26 Sep 2013 5:46:34pm

How many times have we heard this ridiculous strawman argument?

We should be drilling for gas because it is an important resource, replacing higher priced oil with a cleaner alternative. And helping to advance the developing world and drag millions from poverty. And thereby help resolve global overpopulation.

And when the gas is sold for a profit at global prices, tax revenue flow into government coffers to pay for our education and medical systems.

The implication here is that we would somehow be better off without the gas industry, that it steals manufacturing industry jobs. Nonsense! The fact is, we need a big healthy gas industry or our economy is going struggle.

OntheRun:

26 Sep 2013 8:51:51pm

Will we struggle once all the gas is consumed if pollution prevents agriculture from resuming?

And as the gas companies keep on hiring 457 workers, this isn't going to create Australian jobs. The mining and gas industries have been going on at this level for decades. Foreign workers keep on increasing. There is a woefully inadequate training program.

It may be hard to find skilled locals without training. It may be even harder to find ones that are skilled that wish to destroy the environment they live in.

Mycal:

26 Sep 2013 9:03:23pm

Greig I agree with you (which makes me think I must be arguing purely from self interest) but the thing is CSG extraction does involve potential environmental risks which must be addressed before we proceed, and even then it has to be done carefully.

NWM:

26 Sep 2013 9:49:27pm

No Grieg, the fact is we do not need the fossil fuel industry, we need to get beyond this type of thinking. Unless we say STOP, we will not develop the myriad of alternatives to using fossil fuels and the risks to life as we know it on the planet are potentially significant.

While we make the transition, we need to prioritise the use of fossil fuels to those things that we are dependent on until alternatives are found, and to make sure we reduce our usage immediately on things that are not so important - e.g. cars, which can be hybrid or electric to reduce emissions now. That is what our discussions should be about - what are our absolute dependencies at the moment, and what are we doing about the rest.

As always, why aren't people excited about all the ideas, new sustainable technologies and the prospect of getting beyond the depressing current situation in which we over use fossil fuels to a way of life in which we are not damaging the environment? Surely that's more interesting to talk about and act on than trying to defend the indefensible?

Greig:

27 Sep 2013 9:55:06am

Nonsense, go tell that to the developing world. They want and need our gas to develop their economies. But you say we have to withhold our resources from them, tell them to eat cake, eh? Don't you think your view is a tad elitist?

I am an R&D engineer, so I am always excited about new technology. I see nothing new in renewables, and it is all too expensive. Get back to me when there is a breakthrough.

the nose:

26 Sep 2013 6:06:42pm

There is a crisis Whyalla has been destroyed by the carbon tax. There is a budget emergency is so desperate we are almost bankrupt! the only way to repair the damage is to give rive rich mothers $75000 to have a baby.We have lost control of our boarders, our hero Tony will save us from the invading hoards by implementing a news blackout on this matter.The only way to save us from the great big black hole, is to dig holes all over NSW and get the GAS! Tony will save us!

James Murphy:

Heretic:

26 Sep 2013 6:08:55pm

Australia appears to be just another country to be exploited for its natural resources by foreign corporations without the populace deriving much, if any, benefit.

A case in point is Greece which, according to Greek political analyst Aristotle Vassilakis, is to 'sell' its vast oil and gas resources to the Texas Noble Energy Co for a princely 20 per cent share of the profits.

No doubt energy prices for the Greek population will also increase drastically.

Here's a thought: Greece could quite possibly have been driven into strategic bankruptcy (default) by the banker mob in order for this process to be facilitated.

RoxyR:

Heretic:

27 Sep 2013 8:17:08am

RoxyR:

Search for:

The New Mediterranean Oil and Gas Bonanza by F William Engdahl (Global Research).

Also see "The Energy Triangle" on Wikipedia ("Large oil and natural gas reserves are anticipated to be located in the Ionian Sea and Libyan Sea; within Greece's territorial waters. Preliminary survey results regarding the size and locations of the deposits are expected to be released in late 2013").

Noble Energy itself mentions on its website the discovery of natural gas in Cyprus only estimated at "gross mean of 7 trillion cubic feet."

dman:

26 Sep 2013 6:17:19pm

Get he USA, which is creating wayore shale gas and CSG than us quarantines domestic demand, and infant is reluctant in some ways to export. I know australia has a different economy but surely we should be doing a similar thing. We're too short sighted

dman:

Hudson Godfrey:

While we're on the subject will somebody riddle me why petrol in Saudi Arabia is 16cents per litre and ours is verging on $1.60?

They manage the volume of international supply to maximise prices so they can afford to subsidise local supplies.

Meanwhile from an environmental standpoint I don't think there's anything like evidence on which we can be provided with sufficient assurances that fracking is a safe enough practice.

Somebody needs to do the maths on exporting Liquid Natural Gas to work out whether there's really enough left on the table for Australians to make this worthwhile. And by worthwhile I mean on a model that balances the supposedly higher price others are willing to pay today with the cost of not having it there for ourselves to use tomorrow.

RoxyR:

26 Sep 2013 11:27:59pm

HG,

The Saudi Arabia one is easy. They have huge reserves onshore and the cost per barrell to extract the oil and/or gas is minimal. They then subsidise the cost of fuel to ridiculous levels, as do most Middle East countries.

The problems these countries are now facing are various;1. Cheap fuel means no incentive to conserve so usage is rapidly escalating.2. Their refineries have not kept pace with demand and they are having to build new expensive ones.3. Some are actually importing fuel products, Iran was up to 200,000 barrels/day of gasoline.4. Their budgets are suffering yet they are having to keep spending to satisfy the people, particularly the young, so as to keep control.

Once you've started subsidising fuel it is painful to stop.

Australia on the other hand ties its fuel costs to the open market - Singapore posted prices plus freight .

Re gas reserves, the argument is that some should be dedicated to the local market. This of course means that income from sales for the producers will be spread over a longer period of time such that the project is less economic.

Keep in mind with LNG projects you are normally talking $10 billion plus, so the producers do their eceonomic calculations pretty carefully. The NWS project in WA was developed on the proviso that a certain amount was dedicated to the Perth market, but the whole gas/LNG scene has move on a fair way since then.

Hudson Godfrey:

27 Sep 2013 12:17:10pm

Right so sorry if I've mislead you, but the question was kind of rhetorical. I just meant to infer that as gas exporters here, compared with oil exporters overseas, we the people are not benefiting nearly as much as perhaps we ought to expect we should.

Edward:

26 Sep 2013 9:37:26pm

Sovereignty? As long as we have the appearance of democracy with the facade of choosing our destiny via way of casting a vote we will be told everything is apples, we are a sovereign nation. Bit of a joke isn't it, MSM in general turning a blind eye to what is happening in so many segments of the economy. Good article BTW.

Ryan:

26 Sep 2013 6:53:06pm

Great article, exposing big business and their relentless drive for profit and access to the resources of the australian people. I am glad to finally see the mainstream media actually write honestly about one of the big issues affecting our country.

Ray Manta:

26 Sep 2013 6:59:31pm

Thank you Mark Ogge for telling it like it is.

The corporate state has declared war against the people. Foreign-owned mining and energy interests are far more important in government eyes than the Australian people who own the resources. We are being told blatant lies by the very politicians elected to represent us.

Let me know where the barricades are and I will gladly mount them to defend this land against all the monkeys who have taken over the zoo.

Ray Manta:

27 Sep 2013 8:16:59am

I live under the rock called NSW, where politicians have habitually lied, and where coal mining is tied up in corruption confirmed by ICAC's Obeid enquiry. But I believe that the land that my family fought and died for is today under more threat than ever from the venal corporate state, now headed up by the LNP, who are displaying even less decency than Labor in this matter.

bobtonnor:

27 Sep 2013 9:36:52am

what about a wind turbine or a PV power plant? Once the water under your land has been shafted, the water table has dropped by 10-15 metres, which are all possible effects of CSG extraction, you say it is your choice but it might not be your neighbours, cue Lord Aitken, my friend Peter the lawyer will be well aware of the good lord. A PV plant or a turbine wont screw the ground water and essentially it will go on forever. Seems like a no brainer to me.

Nick:

27 Sep 2013 10:45:49am

I see some benefits in using CSG, and some downsides. At the moment, the discussion is not based on a desire for best possible evaluation and clarity. At the moment players like Macfarlane simply want to run a supply scare scenario to get their desired outcome, despite their lip-service to best practice.

Blanket assurances of low impacts are not realistic, evaluation has to be thorough and on a deposit by deposit basis. Some will be more guaranteeable than others. We need to know that best practice is mandated and followed in all assessment. We need more than blandishments about gas leakage, about inter strata movement of gas and water, and about water usage and treatment of discharge. I know that even best practice brings no guarantee of predicted outcomes eventuating, but we are never having such technical discussions, we simply get political arm-twisting.

The world is awash with decommissioned mines and intractable/tractable waste problems that are not being addressed adequately. While practice has improved on that score, we still lack assurances and governments lack the will to drive for the truly best outcomes for the environment.

John Forbes:

Mycal:

26 Sep 2013 8:30:17pm

I'll declare my interest, I have shares in energy companies, including Santos (one of the big evil exporters). Why should I subsidise gas consumers in NSW? Why should I be prevented from seeking the best possible return on my investment? Why is a gas consumer in Australia more deserving of lower gas prices than a consumer in China or Japan or Indonesia? NSW has huge reserves of gas, why aren't they being exploited?

Protectionist policies have been tried before and universally they have failed, Australia's prosperity is predicated on a free market open economy. I prefer it that way, even for gas.

Nick:

27 Sep 2013 10:31:08am

I'll declare my interest: I'm a citizen of NSW. Why should I subsidise flag-of-convenience transnationals to exploit resources that could be best used here? How do I benefit from moving to international pricing of a finite resource under a government bent on easing taxes on mining companies while maintaining there subsidies? They will move the product and profits where they will, leaving me and my fellow taxpayers the expense of potentially contaminated aquifers. There are already hundreds of orphan mines discharging waste to the surface and subsurface waters of this state already, for which we have no remedial budgets allocated. Some markets are clearly too free, but where is the political nous that acknowledges and acts on that fact?

Mycal:

27 Sep 2013 12:14:03pm

No problem Nick, you set up the company and make the investment and subsidies NSW consumers all you like.

As for the environmental issues, yes I agree, much more science needs to be done and rigorous environmentals standards established for fracking before we go in boots and all. I think Queensland will rue the day because sooner or later some one is going to stuff up. However I can't see this happening under the Libs

Nick:

27 Sep 2013 12:46:25pm

You and I can be frank about our motivations. The trouble is neither government or industry is frank about theirs, because they know that equity [which is required for social stability] and inter generational security cannot be satisfied by the current paradigm. We are sitting on finite resources, and extraction of the remaining resource gets more energy expensive. It's no longer a time for leaving the allocation of finite resources to a market model that is focussed on short term minority interest benefit, and is not accounting for long term and real physical externalities that it regards as politically tradeable.

Pun :

26 Sep 2013 8:55:34pm

Where is the mandate for CSG? Why has Banaby Joyce appeared tochange his attitude from (ABC Lateline 2011, the nation should decide) to the 2013 one where he is reported as planning to sell his property to avoid a conflict of interest? Abbott's plan to use federal legislation to force through CSG exploration must have been on the Coalition agenda before the election., which makes one wonder what is going on and who is shaping policy for the nation, whether a US-style Legislative Action group has planted its feet in Canberra, and if so, when Coalition policies on CSG coalesced into actual decisions.

Anyone who has seen the documentaries on Fracking in the US could not want this for Australia. The issues are both environmental, but also issues of alienation and exclusion in what is supposed to be a representative parliamentary system, not a system that represents private property.

Womat:

26 Sep 2013 9:19:49pm

For industrial markets in Australia - has there been any research done on alternative energy sources to meet their needs? Concentrating solar thermal maybe - or is large-scale biogas feasible? How much biogas raw material are our cities and livestock generating?

For domestic markets, there are a lot of ways to avoid needing gas. Forget gas boosted solar hot water - get a properly-sited evacuated tube system and it won't need boosting at least 95% of the time. Cook with induction - more efficient than gas and without the NOX. Passive solar heating and way-over-BASIX insulation will reduce the need for winter heating - then reverse-cycle A/C; ground heat pump or high-efficiency biomass stove for top-up heating.

Ray Manta:

26 Sep 2013 9:59:35pm

I find it very curious that the ABC and other news sites today have been giving prime headline space to a petty story about Christine Milne's office staffing while the LNP is engaging in spurious deals concerning coal mining and CSG in Queensland and NSW.

Yesterday saw the under-reported signing of the "one-stop-shop" deal to give the Queensland Govt sole jurisdiction over all environmental decisions within that state.

Today we had Ian Macfarlane telling complete whoppers about the concocted gas crisis in NSW.

Where is the piercing analysis of those events by the ABC's staff journalists? Are they all missing in action? Or is there a purpose in distracting readers at this time with an irrelevant story undermining the only political party speaking out against the coal and CSG juggernaut?

Theo:

DethLok:

26 Sep 2013 11:41:13pm

I understand WA govt made the WA gas producers reserve gas for WA, so this easily foreseen problem apparently won't occur in WA, due to basic foresight and good business practice.So I've read, anyway...

maggie:

27 Sep 2013 6:49:02am

Its all about big business and the LNP are leading the way shamelessly and don't give a stuff about our planet, they will destroy everything that has over the years been reserved, our forests ,reefs and everything we hold dear will vanish, if we let this happen then we are as bad as this so called LNP . they should rename themselves as the demolition team of all that's good. Typical that the QLD government has been given such power, all of us oldies need to get out our walkers and sticks and wheel chairs and get back to showing the young how to go about protecting our planet and to keep the likes of the LNP in check.

Mark:

27 Sep 2013 7:28:41am

It is ridiculous that we export millions of tonnes of gas to other countries, but then say we need to have CSG so we don't run out of gas. Surely we should use the resources we have from the North West Shelf and other off shore wells for our use first. Any extra could then be sold...but then we probably don't own it anymore, anyway!CSG and it's aftermath will haunt us all for ever.

Harquebus:

rockpicker:

27 Sep 2013 8:14:54am

Ian McFarlane says we should get "every molecule" of gas. Apparently he thinks there are no ill effects. He has been a twerp for years. The news out of Qld is horrifying in terms of water. There are many countries in the world who say X petajoules of gas will be needed and therefore we will retain a certain amount. There need be no disconnect from export pricing.

barsnax:

27 Sep 2013 9:26:21am

If it wasn't so serious it would be laughable. We have weak politicians who have been comprimised and corrupted by the almighty dollar and are willing to risk polluting our most basic of life neccessities.

It beggars belief that we actually vote these lying morons into office.

CiserosBoy:

27 Sep 2013 10:24:44am

Hardly news Mark, well not here in WA where the export of LNG has been in progress for the last 30+ years and still the state government will not legislate to either control the price of domestic gas or guarantee that same supply.

I see no reason why when a state government grants the exploration / development / export permits of an Australian resource that same government should not impose local sale conditions on the operators.

Don't forget these companies make $billions form these resources, how much is enough? Another question for the politicians is: why should Australians compete with overseas markets for something they own? Shouldn't we be paying for the extraction, processing and transport plus a reasonable mark-up?

Morestone:

27 Sep 2013 10:28:10am

The Pilliga will be a soft target because it is state forest, don't have to deal with landholders. If you want to see what coal seam gas exploration does to inland state forests where the physical damage to soil etc takes a long time to repair have a look at the area around Kogan in inland southern Queensland on google earth. These areas have been soft targets for years, out of sight out of mind.

R. Ambrose Raven:

27 Sep 2013 12:04:53pm

Given the indifference of Big Energy, politicians' absolute refusal to plan and regulate, and the lack of investment in base load power, the rising price of power due to the recent export approvals for LNG (meaning the tripling of gas exports by 2017) could destroy manufacturing and other tradeable and non-tradeable goods sectors far more effectively than the Great Recession and the high dollar.

Manufacturers accused then Resources Minister Martin Ferguson of "wishful thinking" on the longer-term availability of the fuel at prices they can afford.

Manufacturing Australia has warned of price spikes and shortages that could cost 200,000 jobs and wipe $28 billion a year from gross domestic product. Reserving just 5% of east coast LNG exports for domestic use would support $29.5 billion of manufacturing output - "The economic benefit of supporting our manufacturers dwarfs the loss to gas industry".

Gas prices in Perth and Brisbane have almost tripled since 2008. ES gas prices are forecast to double by 2020.

After all, Big Mining has caused the high dollar from which manufacturers are suffering, but far from being compensated are to be further punished by this export obsession. Big Mining is also costing manufacturing jobs, skills, and opportunities, by keeping the Australian dollar higher than otherwise and by creating a severe skills shortage and by retarding local industry efforts to expand.

ashtongate:

27 Sep 2013 12:29:15pm

Here in WA I'm currently paying for as much gas in one month as I paid in two months just over a year ago. The question now becomes turn on the gas at night or put on another jumper. Ditto electric and water use....

Ozchucky:

27 Sep 2013 1:39:33pm

Thank you for this article Mark.

You have slammed the CSG industry hard regarding the economics of CSG and the expected impacts on Australian industries. I was not familiar with the economic implications, so I thank you for that. From an economic perspective, the only "crisis" is the one that is about to befall Australian gas consumers.

Let us look at some other inconvenient little factoids about Coal Seam Gas.1 Hydrology. CSG drilling and fracking have a devastating effect on ground water levels and ground water quality. Contaminated ground water (if there is any left) becomes contaminated surface water, then we feed it to our livestock, swim in it, wash in it and drink it. The evidence of hydrological disaster has been available for years.See ABC Four Corners "Gas Leak" at http://www.abc.net.au/4corners/stories/2013/04/01/3725150.htm See "Gasland" at http://www.palacefilms.com.au/gasland/ 2 Methane. CH4 or methane is the main fuel derived from Coal Seam Gas. After fracking, it is common for the methane gas to leak out of the ground and into the atmosphere. Methane is many times more potent as a greenhouse gas than the much maligned carbon dioxide.See http://en.wikipedia.org/wiki/Greenhouse_gasses#Global_warming_potential 3 Fuel of the Future. Rubbish. CSG is a non-renewable fossil fuel, just like petroleum or coal.4 Clean and Green. Rubbish. If you burn a kilogram of methane, you get about 55 Megajoules of heat energy and 2.75 kilograms of carbon dioxide i.e. CO2. By way of comparison, burning a kilogram of petrol yields about 46 Megajoules and 3 kilograms of CO2. Burning a kilogram of coal (anthracite) yields about 32 Megajoules and 3.6 kilograms of CO2. Burning coal seam gas produces a little more energy and a little less of the greenhouse gas, CO2 than petroleum or coal. CSG is certainly not "clean and green".

Governments that extol the virtues of CSG are talking chutzpah. I therefore recommend, in the strongest possible terms, that such governments and the deals they sign must be investigated by anti-corruption authorities.

Ray Manta:

"As a prerequisite for life, water is hardly an optional extra or a luxury of personal choice. Loss of water, or significantly degraded water quality, isn't an inconvenience, it's the end game ..."

An eloquent statement in court yesterday from Paola, a defender of the Bimblebox Nature Refuge in Central Queensland, a landscape currently under threat from that overindulged miner Clive Palmer.

Those words strike at the essence of every struggle to save the land for future generations. What is it to be folks, lots more money for some people who already have too much now, or a protected environment with the elements that will continue to sustain life?

R. Ambrose Raven:

27 Sep 2013 2:22:43pm

Given the indifference of Big Energy, politicians' absolute refusal to plan and regulate, and the lack of investment in base load power, the rising price of power due to the recent export approvals for LNG (meaning the tripling of gas exports by 2017) could destroy manufacturing and other tradeable and non-tradeable goods sectors far more effectively than the Great Recession and the high dollar.

Manufacturers accused then Resources Minister Martin Ferguson of "wishful thinking" on the longer-term availability of the fuel at prices they can afford.

Manufacturing Australia has warned of price spikes and shortages that could cost 200,000 jobs and wipe $28 billion a year from gross domestic product. Reserving just 5% of east coast LNG exports for domestic use would support $29.5 billion of manufacturing output - "The economic benefit of supporting our manufacturers dwarfs the loss to gas industry".

Gas prices in Perth and Brisbane have almost tripled since 2008. ES gas prices are forecast to double by 2020.

After all, Big Mining has caused the high dollar from which manufacturers are suffering, but far from being compensated are to be further punished by this export obsession. Big Mining is also costing manufacturing jobs, skills, and opportunities, by keeping the Australian dollar higher than otherwise and by creating a severe skills shortage and by retarding local industry efforts to expand.

R. Ambrose Raven:

27 Sep 2013 2:38:32pm

We still await an explanation as to how most of us derive anything but extra cost from the recently-created Eastern States LNG export push that is driving up Eastern States domestic gas prices to international levels, from which the only obvious beneficiary are energy transnationals.

Big Energy and the politicians it owns are now exploiting the problems they've created in the Eastern States to Big Energy's advantage, by using the resulting shortage of gas to insist that "we" need open-slather on CSG for domestic supply. Thus the politicians not only get the graft from transnational energy exploiters for selling out, but also blackmail us into measures (i.e. open-slather CSG extraction) that are environmentally damaging, reward Big Energy's disdain, and may be socially and industrially damaging (note the certainty of price increases). Who benefits most? Big Energy's profits!

Note, too, that the Barnett Government in WA and the NSW, Victorian, and Queensland governments have all failed to create enforceable requirements that sufficient gas reserves be set aside to satisfy domestic consumption for a long period.

Sometimes we need to say NO, refuse the approvals, and retrospectively legislate for domestic gas reservation. That - plus prohibition of any further export licences - is what NSW should do.

kelvinp:

27 Sep 2013 2:54:47pm

The statement that the wholesale price for gas is 4 times higher for Asian markets is very doubtful, I currently reside in Chian and my apartment is gas cooking and gas hot water the price I pay for gas is $15.00aud for 3 months my 3 month gas bill in Perth is $180.00 same usage. Somewhere we get really screwed on our gas bills in Perth.

ken:

27 Sep 2013 3:54:08pm

This is a singularly confused article. It assumes that it costs nothing to pipe gas to Gladstone, liquefy it and ship it overseas in special vessels (consisting of a gigantic floating sparklet bulb). In fact Australian gas consumers have enormous natural protection because all these stages, particularly liquefying and shipping, are very expensive.

If there is an open gas market local consumers will always get their gas at a fraction of the price consumers overseas would have to pay for the same gas from Australia. I suppose it is possible for gas producers or wholesalers or retailers to jack up the price and blame it on the overseas price. Free market forces or Government regulatory bodies should prevent such abuses.

I did not like the way the WA Government tried to reserve a proportion of gas production for local use. This is not unlike the way backward Governments in Asia and Africa repeatedly jack up their take from firms brave enough to establish mineral production in these countries. The best way to control the price of anything is to stand back leave it to the market.

And it is probably unconstitutional - it is a form of tariff protection and only the Commonwealth can use this tool.

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